The iPhone 11 Is Turning Things Around for Apple in China

Iphone 11 Colors Credit: Apple
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What a difference a year makes. This time last year we were reeling from the first quarterly revenue forecast downgrade that Apple had made since the pre-Jobs era, a decision necessitated by a massive problem with iPhone sales in China that basically meant that Apple wasn’t going to hit its estimates for the quarter, and therefore needed to manage the expectations of investors and analysts.

The crux of the problem back then seemed to be the affordability of Apple’s premium iPhone XS and iPhone XS Max models, which were priced at a luxury level by Chinese standards at a time when smartphone sales were generally on a downturn in that country, especially on the higher-end. While rivals like Huawei continued to rack up sales due to a wider selection of mid-tier smartphones, Apple and other premium rivals like Samsung languished, even after massive price drops, leading some analysts to suggest that Apple might need to create a new iPhone specifically for China. While the iPhone XR was also available there, and seemed to be poised to do reasonably well, it seemed that Chinese consumers didn’t meet it with the same enthusiasm that was shown in the U.S.

Fast-forward to this month, however, and it looks like Apple has recovered nicely from its struggles in China, with its overall stock peaking at $300 per share last week, and a new report from Bloomberg revealing that Apple’s smartphone shipments in China actually grew 18.7% last year, with roughly 3.18 million units shipped in December alone. This is even more surprising when you consider that overall smartphone sales in China are down significantly, having fallen short of 30 million units, representing a drop of more than 13 percent compared to December 2018.

The iPhone 11

Much of the credit for the increase in shipments is being laid at the feet of Apple’s new iPhone 11, which was released in September. While the iPhone XR has also been a runaway success around the world, including in China, the iPhone 11 seems poised to do even better; the older iPhone XR still outsold the iPhone 11 during its launch quarter, but by Christmas the newer iPhone made up the highest percentage of all smartphones activated in the U.S.

This has no doubt been helped by Apple’s decision to rebrand its lineup this year to position the iPhone 11 as a mainstream model. While the iPhone XR was quickly recognized by many as the best iPhone for most people, it still felt like a second-class citizen against Apple’s iPhone XS and iPhone XS Max, which had built on the premium iPhone X released the prior year. Calling the more premium iPhones “Pro” models this year has no doubt helped to assuage customers fears that they were missing out on something if they chose to purchase the less expensive model.

What’s also notable to many analysts is that the iPhone 11 has been succeeding in China despite its lack of 5G readiness, which makes these shipment numbers even more impressive. This also suggests that, contrary to the opinion of many tech analysts and commentators, the public at large isn’t yet putting as much of a priority on 5G capabilities.

According to Bloomberg, the camera improvements Apple has made in the iPhone 11, along with a significant boost in battery life, have been well-received by both consumers and critics alike in China, although it’s equally likely that the even more affordable price hasn’t hurt either; Apple dropped its entry-level price by $50 this year, and has also benefited from tax cuts that allowed it to drop prices in China even further.

These numbers are even more encouraging considering that the Chinese New Year celebration is still coming in late January, which will undoubtedly spur more sales in China, which is second only to the U.S. in its importance to Apple’s bottom line.

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